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Describe how the Federal Reserve's raising of interest rates affects the following variables in the short run: household consumption, business investment, real GDP, and the
Describe how the Federal Reserve's raising of interest rates affects the following variables in the short run: household consumption, business investment, real GDP, and the price level. Insert a well-labeled Aggregate Demand/Aggregate Supply graph that would illustrate the effect of an increase in interest rates on Aggregate Demand when the economy is in the intermediate range close to potential real GDP. Explain your graph.
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